TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.

TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.

These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel  rather, use them as a starting point for your own research.

The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Hold."

Capstead Mortgage

Dividend Yield: 10.60%

Capstead Mortgage

(NYSE:

CMO

) shares currently have a dividend yield of 10.60%.

Capstead Mortgage Corporation operates as real estate investment trust (REIT) in the United States. The company has a P/E ratio of 10.10.

The average volume for Capstead Mortgage has been 882,800 shares per day over the past 30 days. Capstead Mortgage has a market cap of $940.3 million and is part of the real estate industry. Shares are up 11.8% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Capstead Mortgage

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.1%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for CAPSTEAD MORTGAGE CORP is currently very high, coming in at 93.47%. Regardless of CMO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CMO's net profit margin of 48.74% significantly outperformed against the industry.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income has decreased by 15.3% when compared to the same quarter one year ago, dropping from $33.47 million to $28.36 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CAPSTEAD MORTGAGE CORP's return on equity is below that of both the industry average and the S&P 500.

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Oxbridge Re Holdings

Dividend Yield: 9.70%

Oxbridge Re Holdings

(NASDAQ:

OXBR

) shares currently have a dividend yield of 9.70%.

Oxbridge Re Holdings Limited provides reinsurance business solutions primarily to property and casualty insurers in the Gulf Coast region of the United States. It writes collateralized policies to cover property losses from specified catastrophes. The company has a P/E ratio of 6.49.

The average volume for Oxbridge Re Holdings has been 5,900 shares per day over the past 30 days. Oxbridge Re Holdings has a market cap of $29.9 million and is part of the insurance industry. Shares are down 13.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Oxbridge Re Holdings

as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • OXBR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market, OXBRIDGE RE HOLDINGS LTD's return on equity exceeds that of both the industry average and the S&P 500.
  • OXBRIDGE RE HOLDINGS LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, OXBRIDGE RE HOLDINGS LTD increased its bottom line by earning $0.75 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.75).
  • The share price of OXBRIDGE RE HOLDINGS LTD has not done very well: it is down 13.41% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income has significantly decreased by 78.0% when compared to the same quarter one year ago, falling from $1.69 million to $0.37 million.

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Compass Diversified Holdings

Dividend Yield: 9.10%

Compass Diversified Holdings

(NYSE:

CODI

) shares currently have a dividend yield of 9.10%.

Compass Diversified Holdings is a private equity firm specializing in acquisitions, buyouts, and middle market investments. It seeks to invest in manufacturing, distribution, consumer products, and business services sectors. The firm prefers to invest in companies based in North America.

The average volume for Compass Diversified Holdings has been 112,500 shares per day over the past 30 days. Compass Diversified Holdings has a market cap of $860.1 million and is part of the conglomerates industry. Shares are up 0.2% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates

Compass Diversified Holdings

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • CODI's revenue growth has slightly outpaced the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 12.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 55.19% to $38.08 million when compared to the same quarter last year. In addition, COMPASS DIVERSIFIED HOLDINGS has also vastly surpassed the industry average cash flow growth rate of -6.58%.
  • Despite currently having a low debt-to-equity ratio of 0.38, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CODI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.72 is high and demonstrates strong liquidity.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Financial Services industry. The net income has significantly decreased by 129.9% when compared to the same quarter one year ago, falling from $7.41 million to -$2.22 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Financial Services industry and the overall market on the basis of return on equity, COMPASS DIVERSIFIED HOLDINGS underperformed against that of the industry average and is significantly less than that of the S&P 500.

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